Analyst Prefers Pepsi to Coke Because of Diversified Products

Gary Bradshaw, of Hodges Capital Management, sees consumer resistance to sparkling beverages, as well as the strong dollar, “really hurting the revenues and earnings” of Coca-Cola (KO). He finds the stock “in neutral” because “it is not showing any earnings growth,” so Coke “is going to continue to be flat for a while.” When Susan asked if the willingness of consumers to pay more per ounce for smaller packages means “no one wants to drink cola anymore,” Bradshaw responded that consumers are drinking more teas, waters, juices, and energy drinks “and pushing back on the sodas.” She ventured to ask whether Coke can even survive as it is, and Bradshaw replied that his fund prefers Pepsico (PEP) to Coke, because Pepsi is more diversified through its ownership of Frito-Lay and Quaker Oats, growing earnings at 8% plus.

The huge online retailer Amazon (AMZN), is also slated to report, and Gene Munster of Piper Jaffray set out the bogeys it would be shooting for. Guy Adami remarked, “Valuation doesn’t make any sense, but they can continue to pull the levers necessary to make the stock trade higher.” Pete Najarian agreed, praising the company for its execution and predicting it will go higher. The more cynical Brian Kelly was not impressed and recommended selling the stock after a move from 280 to almost 500, asking, “What else is this company going to do; who else is going to buy it? Why wouldn’t you take a profit? It seems silly not to.” In the next clip, CNBC’s Deidra Bosa observed that, “Amazon beats half the time, and half the time it misses, but Amazon doesn’t trade like any other stock. It is heavily watched, heavily traded, and it rarely makes any money.” She concluded that the stock responds more to negative than to positive earnings news.

Finally, the always provocative Marc Faber, Publisher of the Gloom, Boom, & Doom Report, seeing Micron Technology (MU) down 50%, noted that declining stocks are outpacing advancing ones, and over 1200 stocks made new lows Friday, with fewer than 60 new highs. He predicted that U.S. stocks “could easily drop 20 to 40%,” and he also cited down moves in other markets. What Faber and others warning of a crash miss is that the Federal Reserve is sponsoring this market and cannot accommodate a serious decline in an election year. It would be wild speculation to say that if a widely-owned stock like Apple (AAPL) hit an air pocket, the Fed would buy lots of iPhones, but the Fed prides itself in its willingness to intervene creatively and aggressively in markets and knows no boundaries, so traders will bank on the “Yellen put.”